Major U.S. Chains Gain As 200,000 Small Retailers Close Shop

Many Americans are shopping small on Saturday to support mom-and-pop clothing, toy, furniture, sporting goods, hardware, and electronics stores.

Photo Insert: Many retailers are being forced to close because not declared as "essential" businesses, thus paving the way for company's such as Target to reap the benefits.

But this year's Small Business Saturday promotion is unlikely to change the fortunes of independent shops in America, which have diverged dramatically from their larger rivals, Nathaniel Meyersohn reported for CNN Business.

Small retailers have been squeezed out throughout the pandemic and are at a significant disadvantage navigating the current supply chain crisis, rising inflation, and the shortage of workers, said retail analysts and supply chain experts.

A survey by the National Federation of Independent Business (NFIB), a lobbying group for small businesses, said 39% of small business owners reported in October that supply chain disruptions have had a significant impact on their business.

Another 29% reported a moderate impact. Only 10% reported no impact from supply chain disruptions. "Small business owners are attempting to take advantage of current economic growth but remain pessimistic about business conditions in the near future," said NFIB chief economist Bill Dunkelberg in a statement.

First, as COVID-19 spread last year, many small shops did not meet the criteria of "essential" businesses and had to close down. Their larger competitors such as Walmart, Target, Costco, Home Depot, and others were able to stay open.

With smaller retailers closed and spending on travel and leisure at a standstill, these major chains boomed as Americans stocked up on groceries, household basics, office supplies, and furniture during stay-at-home mandates.

Meanwhile, the pandemic caused roughly 200,000 more small businesses to close in the first year of the pandemic than in a typical year, the Federal Reserve estimated.

As smaller shops began reopening in the second half of 2020 and early 2021, they met a new set of challenges: manufacturing shutdowns and material shortages that made it harder to get products and keep them in stock, higher costs for shipping and transportation, as well as difficulties hiring and retaining workers.

All retailers have grappled with these problems this year. But the challenges have hit small stores harder, experts say. Mom-and-pop owners are typically lowest on the priority list for manufacturers and shipping companies when shortages or delays pop up.

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